In the first part of our series on DIY e-commerce, we looked at the basics of setting up an e-commerce platform. One of the most critical elements of any online store is the payment system… without a trusted and secure payment process in place even the most attractive of e-commerce enterprises will be doomed for failure.
When starting out, the first point of call is to set up an e-commerce/online merchant account with your bank of choice. You cannot make use of your existing bank account because the risks associated with online trade are very different (however, these accounts will obviously be linked once you are up and running). Depending on the applicant, this process can take anywhere between two weeks to three months to set up. Once your bank has approved the application, the next step is to partner with a payment gateway provider to process the online payments.
If going through a bank sounds like too much of a hack (or, if your application is unsuccessful), you can go straight to a payment gateway provider that will process the transaction via their own merchant account – and charge you one flat fee for the processing and transaction settlement. In this scenario, you can be up and running within 48 hours. Given the complexity of the process, many of the established payment gateway providers now provide this option.
“SMEs don’t have the online turnover to justify a merchant account, they often don’t have SSL certification in place and don’t have the time, skills or resources to facilitate proper, secure online processing,” explains Donovan Marais, channel manager at Sage Pay. “It takes skill, time and resources to effectively manage and securely process online transactions, mitigate risk and minimise fraud.”
When choosing a payment gateway provider, Marais says the key things to look out for include reputation (track record), costs, security and ease of use.
“Find someone local, there are many gateways overseas that offer the same facility but when it comes to troubleshooting, who do you want to call at 2am? As that is when such a company operates,” he adds. “Reporting is also important – you need detailed, real-time reporting and assistance.”
In addition, says Andy Higgins, MD at e-commerce company uAfrica.com, integrating with a payment gateway allows you to offer many different payment methods to your customers.
“To use an example, PayFast offers various payment options, namely Instant EFT, credit cards, Bitcoin, Mobicred, PayD and Ukash,” he says.
When looking at the security aspect, it is important to verify which security methods a payment gateway provider has in place. Some offer extra levels of fraud protection that you may need to specifically request access to. Online fraud is a massive problem, with the South African Banking Risk Information Centre reporting a 23% increase in credit card fraud in 2014. While 3-D Secure, a relatively new layer of verification for online payments has become the standard, not every online merchant system implements it.
Brendon Williamson, general manager of business development at payment services provider PayGate, says there is a big gap in the market with regards to online security for start-up merchants.
“Most new merchants simply cannot afford the big, sophisticated risk engines that the established online retailers use,” he explains.
To mitigate this risk, many of the payment gateway providers are attaching smaller but still robust risk management systems to their SME offering, which afford start-up merchants some peace of mind.
However, Williamson insists that it’s still critical for start-up online merchants to run their own risk management routines.
“The first step to take in protecting your own online business is to know your customers and their buying habits – understand your ‘business norm’,” he says. “A simple welcome call once they’ve registered, if your volumes allow for it, can tell you a lot. And obviously the longer a customer has been with you and the more often they’ve made purchases, the more you can trust them. Don’t automatically relax the rules for accounts over a certain age, though – fraudsters are wise to that one.”